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Bank OZK Income Up 3.4% in Q1, Extending Streak of Rising Profits

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Bank OZK of Little Rock (Nasdaq: OZK) on Wednesday reported a fifth consecutive quarter of year-over-year profit growth.

Net income in the period was $171.5 million, a record for the first quarter and up 3.4% from $165.9 million a year ago. Per share, earnings came to $1.51, up from $1.41 in the first quarter of 2023.

The results surpassed Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.44 per share.

The bank posted revenue of $666.1 million in the period. Its revenue net of interest expense was $406 million, also exceeding Street forecasts. Five analysts surveyed by Zacks expected $392.3 million.

Shares of the company rose more than 3% in after-hours trading Wednesday to $41.82. Year to date, shares were down about 16%.

Bank OZK extended its streak of rising profits despite concerns over its high exposure to commercial real estate. Credit card rating company Moody’s in August shifted its outlook for the bank from stable to negative, pointing to risks from high interest rates, a slowing economy and reduced demand for office space.

Construction and land development deals accounted for 44% of Bank OZK’s loans at the end of the first quarter, equal to the percentage in the fourth quarter of 2023 and up from 39.3% a year ago. Non-farm and non-residential projects accounted for about 19.9% of its loans, and multifamily residential projects accounted for 8.6%.

Total loans as of March 31, 2024 were a record $28.03 billion, having increased $5.97 billion, or 27.1%, from a year ago. On a quarterly basis, loans were up by $1.57 billion, or 5.9%.

In management comments released with Bank OZK’s quarterly earnings report, the lender said loan growth may slow in the remaining three quarters of the year. “Our excellent first quarter loan growth may be our best of the year. While we expect continued good loan growth in the remainder of 2024, we believe that loan growth for the full year of 2024 will likely be less than the $5.68 billion achieved in 2023.”

Bank OZK continues to put money aside to cover bad loans. Over the past seven quarters, the lender has increased its total allowance for credit losses by $237 million.

“This large increase,” the bank said, “reflects both our $12.38 billion combined growth in total outstanding loans and unfunded loan commitments and our cautious outlook on macroeconomic conditions.”

As of March 31, the bank’s total allowance for credit losses was $536.9 million, or 1.11% of total outstanding loans and unfunded loan commitments. That includes the bank’s allowance for loan losses, which was $365.9 million, and reserves for losses on unfunded loan commitments.

Deposits in the first quarter totaled $29.41 billion, up 32% from $22.28 billion in the first quarter of 2023. On a quarterly basis, deposits rose by 7.3% from $27.41 billion.

Like many other banks, Bank OZK has seen a shift in the mix of its deposits away from noninterest-bearing and lower-cost deposits toward time deposits as customers take advantage of higher time-deposit rates.

The lender finished the first quarter with $36.03 billion in total assets, up 24.4% from a year ago.

Bank OZK has about 240 offices in eight states: Arkansas, Georgia, Florida, North Carolina, Texas, New York, California and Mississippi.

The Associated Press contributed information to this report.

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